Imagine the president launching a cryptocurrency while in office. It sounds futuristic, but a bill working its way through the Senate is trying to make sure it never happens.
On Wednesday, Republican lawmakers revised a pending bill referred to as the Clarity Act. The revised text prohibits the president and other high-ranking federal officials from creating or endorsing any cryptocurrency or similar digital assets. The legislation, which CNBC first reported on, introduces new limits on how a president may profit from digital currencies.
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A Republican lawmaker involved in the bill said, "The idea is simple: if you are running the country, you should not be running a cryptocurrency at the same time." The bill would ban those officials from issuing any digital asset, and it also puts new restrictions on how they could make money from crypto.
For all the hype around crypto over the last decade, the United States still does not have a single major law that specifically governs digital assets. Should it become law, the Clarity Act would be the nation's first comprehensive statute for overseeing digital currencies.
Currently, Bitcoin and Ethereum, like many digital currencies, exist without clear legal standing from regulators. While the Securities and Exchange Commission has taken enforcement actions against some crypto projects, there is no overarching federal statute that defines their legal status. This gap has led to increasing calls from lawmakers and industry participants for clear rules, especially after former President Donald Trump launched his own NFT collection and the Biden administration explored a central bank digital currency. The Clarity Act directly addresses this void by explicitly banning top federal officials from issuing or sponsoring digital assets, and placing limits on how they may profit from crypto.
The lack of clear federal rules has become a pressing issue as political figures increasingly dip into the crypto space. Former President Donald Trump released a series of non-fungible tokens in late 2022, raising questions about the ethical boundaries for former officials. Meanwhile, the Biden administration has explored the possibility of a central bank digital currency, sparking debate over the government's role in digital finance.
The bill's sponsors emphasized that the prohibition applies not only to the president but also to other top government officials, ensuring that no one in a senior federal role can exploit their position to launch or endorse digital currencies. This measure aims to prevent any potential abuse of power or conflicts of interest that could arise if a sitting president were to endorse a cryptocurrency whose value could be affected by executive actions.
The push for such legislation follows recent high-profile forays into digital assets by political figures, including Trump's NFT collection and the Biden administration's CBDC exploration. These actions highlighted the absence of clear ethical guidelines and legal boundaries for government officials in the crypto space, prompting lawmakers to act.
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